NPR sees sharp downturn in advertising revenue, leading to talk of cuts

NPR’s new chief executive is signaling that there may be some static ahead for the radio and digital news organization.

Halfway through its fiscal year — and six months into Gary Knell’s tenure as chief executive — Washington-based NPR has seen a sharp downturn in corporate “underwriting,” or advertising revenue. The falloff has led to projections of an annual operating deficit and internal discussions about staff and program cuts.

Another problem area: The strong audience growth that NPR’s news and entertainment programs experienced over the past decade appears to have flattened, a potentially worrisome development because more stations are carrying NPR’s programs.

The increasingly bearish climate poses a challenge for Knell, a highly regarded public-media manager who became NPR’s chief executive in December. Knell replaced Vivian Schiller, who resigned in March last year after an embarrassing episode in which two NPR fundraisers were recorded making disparaging comments about conservatives in a meeting with two men posing as donors from a bogus Islamic group. The meeting was secretly taped by a conservative activist, and helped push House Republicans to cut off federal funding of public broadcasting (the money was later restored).

NPR has operated at a deficit in three of the past four years, Knell said in an interview Wednesday, and it has had to dip into its endowment to cover its expenses in those years.

But the hole is growing deeper: Through March, NPR recorded a $2.6 million deficit, over and above what its endowment covers. The growing deficit makes it “likely” that NPR will end its fiscal year in September in the red, said Dana Davis Rehm, a spokeswoman.

Knell spelled out some of the details in a meeting with NPR employees on Wednesday. But he stopped short of suggesting that NPR would have to chop its staff or its lineup of news and entertainment programs. “That’s the last thing I want to do,” he said in an interview.

Like many news organizations, NPR is facing higher expenses this year as it covers the Olympics in London and the presidential election at home, among other major national and international stories.

The situation isn’t nearly as dire as in 2008, when a $23 million shortfall led to the dismissal of 64 employees, or about 7 percent of NPR’s workforce, including several longtime correspondents and program hosts. It also dropped two daily programs to save money, including “News and Notes,” a show designed to attract more African American listeners.

This time, there have been internal discussions about dropping “Tell Me More,” a daily program also aimed at African Americans and other minorities, according to people who are privy to the matter. They said nothing has been decided.

Knell noted in the interview that all of NPR’s traditional sources of funding are under pressure and that reducing expenses is critical. “NPR has been withdrawing from the bank and we can’t keep doing that,” he said. “We have to be at break-even or be in a positive position on an annual basis, or I can tell you at some point we’re going to have to turn the lights off.”